Answered by
Sheikh `Abd Allah b. Ibrâhîm al-Nâsir, professor at King Sa`ûd University
If the company requested to make the purchase goes forth and buys the item and assumes full legal possession of it, then resells it through installment payments to the customer with a separate contract that puts the product under mortgage – meaning that the item has been placed under mortgage pending payment of the full agreed-upon price to the company – then this contract is legal.
It is worth noting that the agreement between the customer and the company upon contracting is for the ultimate final sale and is not contingent on other conditions. It is, in effect, a sales contract placing the item under mortgage for its value, which is legal. As for calling it “lease to purchase”, this is irrelevant, because the effects of this contract are those of a sales contract and not a lease agreement. The most important considerations in dealing with contracts are their actual meanings and implications, not the words and phrases used to convey those meanings.
Source: Islam Today
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